Medtronic takes another step toward value-based care

  • Medtronic has signed a 5-year partnership with Lehigh Valley Health Network to try to create and demonstrate value.
  • Medtronic and Lehigh Valley Health Network aim to reach 500,000 patients and cut costs of care by $100 million.
  • Omar Ishrak, Medtronic CEO, has championed value-based care, a system where suppliers are paid based on outcomes.
A Medtronic worker assembles a device that is inserted into a heart pacemaker.
Munshi Ahmed | Bloomberg | Getty Images
A Medtronic worker assembles a device that is inserted into a heart pacemaker.

Medtronic has inked a partnership with a hospital network to try to create — and demonstrate — value.

The five-year initiative will couple Medtronic's medical device expertise with Lehigh Valley Health Network's clinical expertise. They'll work together to create processes to treat more than 70 medical conditions using Medtronic equipment and improve patient outcomes and cut costs.

LVHN will compare results with existing patient data from its eight Pennsylvania hospitals to measure health outcomes and quantify savings. For some treatments, Medtronic will get paid based on those results, a system known as value-based care.

"This is a big step, and what we bring to this and what Lehigh brings to this are complementary capabilities with the desire to improve outcomes," said Medtronic CEO Omar Ishrak.

He has been a vocal supporter of moving toward this idea that medical device and pharmaceutical companies get paid if their products work. His company has been experimenting with reimbursement models, including signing nearly 1,000 deals requiring it to reimburse hospitals for some costs if its Tyrx antibacterial envelope doesn't prevent infection like it's supposed to in patients who receive cardiac devices.

The phrase value-based care has become a buzzword in the health-care industry, with experts preaching it as a practical reimbursement method and one that could help contain bloated spending.

One wrinkle, however, has been figuring out how to define and measure outcomes.

Medtronic's agreement with LVHN focuses on a mix of clinical and financial results, two pillars of value-based care.

Medtronic and LVHN aim to reach 500,000 patients in Northeast Pennsylvania and cut costs of care by $100 million. The company wants to help LVHN detect signs of respiratory compromise earlier to reduce related-adverse events by at least 20 percent.

The duo is using technology to predict improvements and will also use it to measure them, Ishrak said. In most cases, outcomes can be measured in months or years, a relatively short time period in health care.

"It's extremely important in creating a value-based environment," Ishrak said. "If you can't measure, you can't create a business model."

This one with Lehigh expands Medtronic's efforts and gives it access to patient insights the manufacturer wouldn't normally have, he said. Medtronic can use the data to establish baselines and monitor outcomes going forward.

For LVHN, the partnership can help the health system better treat patients and reduce its costs. Savings to the hospital network may not reach consumers, but they will reap the rewards of not having to pay for additional services they might have otherwise needed, said Dr. Debbie Salas-Lopez, chief transformation officer at LVHN.

"We're exploring how can we do things to improve value, so in some ways it's a lab of sorts," she said. "We're looking not only to do the right thing at the right place at the right time for patients but also at the right cost."

If the partnership is successful, it could serve as a blueprint for others.